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# price pressures
Construction costs surge again in April as inflation continues to pump up wholesale prices
Structural steel and fabricated metal prices were up 42% and 38.5% respectively over 12 months.

THE PRICE OF building and construction materials has surged by over 18% on average in the 12 months to April, according to new figures from the Central Statistics Office (CSO).

But wholesale electricity prices fell by over 25% last month as global natural gas prices stabilised after the initial spike in the wake of  Russia’s invasion of Ukraine in late February. However, electricity prices remain 155% higher than in April 2021, according to the figures.

Overall, the Wholesale Price Index (WPI) — which tracks the prices that manufacturers and producers charge other companies for their products  — was up 5.2% in April from the same month in 2021.

That’s an increase from March when the annual rate of factory gate price growth hit 4.4%.

The price of a basket of construction and building materials increased by 3.1% between March and April, up from a rate of 1% between February and March.

It means that construction input prices were up 18.1% in the year to April.

Structural steel and fabricated metal prices, up 42% and 38.5% respectively over the year, increased by 27.6% and 34.1% between March and April.

Globally, the price of steel had already soared in 2021 amid supply chain bottlenecks and as economies reopened and construction projects recommenced. But the war in Ukraine — which along with Russia, is one of the world’s largest steel producers — pushed up prices even further over the past couple of months although there is some evidence that upward price pressures have begun to dissipate in recent weeks.

Cement prices, up 14.6% over the past 12 months, jumped 6.4% in April, while stone, sand and gravel were up just over 10% from April 2021.

Construction firms have warned in recent weeks that sharply inclining prices are pushing businesses to the brink and threatening the viability of public works projects.

In response, Cabinet approved a new Inflation Framework scheme, aimed at shielding firms involved in the delivery of new schools, roads and other public contracts from the threat of rising input costs.

It will see the State pick up the tab for up to 70% of builders’ inflation costs related to projects that have commenced since 1 January and could cost the exchequer between €30 – €40 million over the first three months of the year, according to Minister for Public Expenditure Michael McGrath.

Commenting on today’s CSO figures, Paul Sheridan, Director of Main Contracting at the Construction Federation of Ireland, said, “The latest rise in the Wholesale Price Index figures won’t come as a shock to anyone in the construction sector.

“It very much tallies with what we are seeing in the industry. There have been unprecedented levels of hyperinflation across construction materials in recent months which is making it increasingly difficult to price projects.”

He added, “We are hearing that suppliers are only providing price quotes that last for a day, such is the level of flux in the market. As you can imagine this is creating great difficulty when it comes to accurately pricing construction projects, which by their very nature involve a longer timeframe to complete.”

“If the price of materials is growing by 50% or more in a matter of months, how can you accurately price a job today that is not due for completion for another two years?

“This is why it was essential for the Government to introduce the Inflation Framework measures that were announced on the 10th of May by Minister McGrath. However urgent and further reforms of the public works contracts are needed to embed these concepts in all future public contracts,” Sheridan said.

Separately, April’s WPI shows sharp increases in the wholesale price of food products.

Overall, food producer prices were up 8.8% over the 12 months to April with meat and fish products rising 17% and 7% respectively.

Wholesale dairy product prices increased by an average of 37% annually while animal feed jumped over 8%.

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